T-Bill: Gov’t Records 170% Oversubscription

Interest rates on treasury bills have dropped sharply across the yield curve, reinforcing expectations of lower lending rates and improved credit conditions within Ghana’s financial sector.

Latest auction results from the Bank of Ghana show that the yield on the 91-day treasury bill declined significantly by 215 basis points to 6.45 percent, marking one of the lowest levels recorded in recent years.

Similarly, the 182-day bill rate fell steeply to 8.18 percent from 10.67 percent, while the 364-day bill dropped by 86 basis points to 12.93 percent. The broad-based decline in yields reflects easing inflationary pressures and improving macroeconomic stability, which have combined to reduce the government’s cost of borrowing.

Analysts say the sharp fall in rates is likely to transmit into lower lending rates by commercial banks, potentially stimulating private sector credit growth and supporting economic expansion. Lower yields on government securities typically encourage banks to seek higher returns through increased lending to businesses and households.

At the same time, investor appetite for government securities remains strong. The latest auction recorded a 170 percent oversubscription, with total bids reaching GH¢25.2 billion, far exceeding the government’s target of GH¢9.32 billion.

Despite the strong demand, the government accepted GH¢11.40 billion of the bids, indicating a cautious approach to borrowing even as market liquidity remains robust.

The 364-day bill emerged as the most attractive instrument among investors, accounting for a little over 37 percent of total bids. Approximately GH¢9.37 billion was tendered for the one-year security, out of which GH¢5.77 billion was accepted.

For the 91-day bill, investors submitted GH¢8.605 billion in bids, with GH¢3.18 billion accepted. Meanwhile, the 182-day bill attracted GH¢7.21 billion in bids, of which GH¢2.44 billion was taken up.

Market watchers note that the sustained oversubscription reflects growing investor confidence in Ghana’s improving economic outlook, supported by declining inflation, exchange rate stability, and prudent fiscal management.

The combination of falling interest rates and strong demand for government securities signals a more accommodative financial environment. This trend is expected to ease financing conditions for both the public and private sectors, while reinforcing the ongoing recovery in economic activity.

However, analysts caution that maintaining this trajectory will depend on continued fiscal discipline, stable inflation expectations, and sustained policy credibility in the months ahead.